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Thread: Why invest internationally?

  1. #21
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    Quote Originally Posted by My Own Advisor View Post
    Fair Mordko but that only matters if I was an investor in the 70s.
    As a rule, you are not going to be obtaining future returns in the past. Last decade is no more indicative of future returns than 1970s. In fact, there is a negative correlation. Markets that had great performance over the last 10 years tend to underperform.


  2. #22
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    Quote Originally Posted by GreatLaker View Post
    A typical investor's lifecycle is from age 25 to 85 - 60 years. In that context, 14 years is a sliver.

    the thing is laker, you didn't cite 14 years. You cited only 3 years, from 2003-2006. That's not enough time to form even a sample.

    my experience mirrors those who say they weren't investing in the 1970s & their international investing experience has been flat to negative. Right now i have a few pesky offshores plus a dutch bank. The bank has been OK strictly because i've been able to sell puts & calls against the bank position, which i've held for nearly a decade.

    i've had more luck with canadian multinationals that are active mostly or entirely outside our borders. There are plenty of these. Easy access to local news since they're HQ'd in canada. Familiar & reliable accounting standards. Even tax-favoured canadian dividends. What's not to like.

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  3. #23
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    I wouldn't put a lot into EAFE but want to be part of at least the European multi-nationals. Hence I've skewed my 12-15% International to VGK (Europe FTSE) with the remainder in EAFE.

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  5. #24
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    Canadian securities regulations are known to be dodgy, particularly so for Canadian companies with oversees operations. Surely anyone concerned about these kinds of issues should stay well clear of Canadian stocks. Which, incidentally, underperformed over the last few decades.

  6. #25
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    Quote Originally Posted by mordko View Post
    Canadian securities regulations are known to be dodgy, particularly so for Canadian companies with oversees operations. Surely anyone concerned about these kinds of issues should stay well clear of Canadian stocks. Which, incidentally, underperformed over the last few decades.


    overseas operations
    ego borago gaudia semper ago

  7. #26
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    Quote Originally Posted by james4beach View Post
    OK, fair enough. But in history, when DID international actually outperform US/Canada for a prolonged period? When I use
    https://www.portfoliovisualizer.com/...ass-allocation

    And plug in US vs International, the most I see - historically - is about a 5 year stretch where international outperforms.

    Are you saying that even though International has never outperformed for a prolonged period, it might start doing so now? Almost sounds like you're saying "it's different this time".
    No, I am saying that there are lessons learned by looking back further than 10 years when studying investing, that I prefer broad diversification when it is available at a reasonable cost, and when people say why invest in an asset class that has under-performed recently they may be projecting recent past performance into the future when it is not warranted.

    I found The Four Pillars of Investing by Dr. William J. Bernstein to be a very interesting book on a lot of aspects of investing.
    Eschew obfuscation. Espouse elucidation

  8. #27
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    Quote Originally Posted by jbonne84 View Post
    I know I should for diversification but there has never been a time as far as I can tell where in a fiscal year when the US got hit that international didn't get hit harder. So this leaves just the upside as a reason. Less than 10% of the time does international outperform the US in the last 10 years.

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    Quote Originally Posted by humble_pie View Post
    2003 was 14 very long years ago.
    .
    Quote Originally Posted by humble_pie View Post
    the thing is laker, you didn't cite 14 years. You cited only 3 years, from 2003-2006. That's not enough time to form even a sample.

    .
    @ h_p, The OP stated that there has never been a time in a year when US had bad investment returns when international did not do even worse. I pointed out 4 years where that was not true... 4 years in a row. OP also stated that less than 10% of the time does international outperform the US in the last 10 years. Actually in CAD, according to Stingy Investor, EAFE outperformed S&P500 in 2012, 2009, and 2007, or 30% of the last 10 years.

    I was responding to your comment that 2003 was 14 years ago.

    2003-2006 is 4 years, not 3.

    Anyway, I prefer broad diversification and recognizing that investing cycles can run more than a decade rather than just picking recent winners. Others don't and I'm OK with that.
    Eschew obfuscation. Espouse elucidation

  9. #28
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    Quote Originally Posted by mordko View Post
    As a rule, you are not going to be obtaining future returns in the past. Last decade is no more indicative of future returns than 1970s. In fact, there is a negative correlation. Markets that had great performance over the last 10 years tend to underperform.
    I would say there are many predictions about what will happen ahead, i.e., lower total equity returns, but there is no rule.

    Rules are good for science and math. They are not so good when it comes predicting the future with any accuracy. This is why you index invest and hold international equities right? You believe, for your portfolio and likely endorse for others, this is the best formula for investing success. Nothing wrong with that. This does not however mean you will be correct. Only in hindsight can any of us say "I told you so" and even then, that isn't overly polite.

    In the end, indexers prefer broad diversification which equates to not overthinking your portfolio; and because of it, market-like returns. Those could be good for international investments or horrible or anywhere in between.

    I'm personally taking my chances with US multinationals directly or with VTI over other international assets.
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  10. #29
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    MOA - all of that is true. It's just that the reasons for not investing internationally that were given by the OP are not valid. He specifically referred to:

    - market performance in the last 10 years and
    - international "instability".

    Well, market performance in the last 10 years can only be used to support the opposite argument because of "reversion to the mean". And international instability is already priced in.

    Diversification does mean you won't win big by correctly guessing that, say, Canadian market is going to double in the next 3 years. If that's what one is after then concentrating on a single market is the right choice.

  11. #30
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    Yes, true, there will always be 'international "instability"'!

    Hidden Content - Working on a $1 million portfolio and $30k per year from it.

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